Disregard of Reality in the Supreme Court Gobeille Oral Argument About Whether Vermont May Compel an ERISA Plan to File Health-Care Claims Data

Abstract

The Supreme Court heard oral argument in Gobeille v. Liberty Mutual Life Ins. Co. on December 2, 2015. The Court is considering whether the Second Circuit Court of Appeals correctly held that ERISA preempts Vermont's mandate that the third-party administrator of a self-insured ERISA health-care reimbursement plan, such as the Liberty Mutual plan at issue, provide Vermont with selected benefit-payment data, often called claims-paid data. One or more of the Justices disregarded important realities, such as: (1) Even though Liberty Mutual operates nationally and challenges only the Vermont mandate, several Justices thought it relevant to discuss how an ERISA plan operating in multiple states with different health-care reporting mandates is subject to costs that the Justices vastly overstated. The total, which was never quantified, is probably far less than the sum of the costs of complying with each state in isolation inasmuch as the states require similar data in similar formats, and then only for plan payments related to each state’s mandated reports. (2) The Supreme Court has long recognized that ERISA does not preempt every state law that imposes an economic or administrative cost on an ERISA plan. In particular, states may use their taxing power to diminish ERISA benefits and impose administrative burdens on ERISA plans, whether by taxing the benefits at the plan or the participant level. Thus, the Vermont mandate should not be preempted simply because its benefit-reporting mandate imposes economic and administrative costs on an ERISA plan. (3) There seems little doubt that (a) ERISA permits a state to compel plans to report benefit payments in order to administer taxes on those payments; and (b) benefit payments are core ERISA concerns. Thus, the Vermont mandate should not be preempted simply because the mandate impinges on a core ERISA concern. (4) There is no evidence in either the words or the statutory history of the Affordable Care Act that Congress therein intended to provide implicitly that ERISA preempts state statutes that compel payors to provide benefit-payment data for inclusion in a health-care data base. Gobeille may force the Supreme Court to present a set of rules that determine which state-law reporting and record-keeping benefit payment mandates ERISA preempts, and which ERISA permits. In short, which burdens, if any, does ERISA permit such mandates to impose. The article proposes several different approaches to make such a determination for the benefit payment mandates that could affect more than 147 million participants in ERISA health-care reimbursement plans.

Keywords: ERISA, disclosure, reporting, record keeping, Supreme Court, healthcare, healthcare databases, healthcare claims, preemption

JEL Classification: G22, G23, G28, I18, J32, J33, K29, K32